Yitzhak Teva, a local barber who was cutting hair at the time, said half of the wall fell on him and he was covered in broken glass.

"I shut the shop and then there was the next explosion," he said.

Correspondents say Sunday's attack is similar to one that took place in the area in July, which was also a double suicide bombing.

The Palestinians' chief negotiator, Saeb Erekat, said the Palestinian Authority had nothing to do with the Tel Aviv attack and condemned the targeting of civilians.

President George Bush said he condemned the attack "in the strongest possible terms".

"It is a despicable act of murder, and
I express my condolences to the government and people of Israel and
especially to the families of the victims," he said.

"All who genuinely seek peace in the region must join in the
effort to stop terror."

Army operations

Earlier on Sunday, Israel carried out a test launch of its Arrow missile interceptors as part of its preparations for a potential US-led war in Iraq.

The Israeli army has stepped up military operations in the West Bank and Gaza in the past six weeks, killing around 50 Palestinians and carrying out a relentless wave of house demolitions, incursions and arrests.

Palestinians say this hindered attempts by Egypt and Europe to broker an agreement among the factions to stop attacks in Israel.

Militants had vowed to take revenge for the army raids and said there would be no truce if incursions and assassinations continued.